Airline loyalty programs are the hidden treasure du jour. UAL (NASDAQ:UAUA) is trying to spin off its Mileage Plus program, while a large shareholder is pushing American Airlines parent AMR (NYSE:AMR) to unlock value by spinning off its own mileage plan. These richly valued hidden assets could mean billions for the airlines. But where were they a few years back, when employees and creditors bore the brunt of the airlines' bankruptcies?

In addition to its loyalty program, UAL CEO Glenn Tilton has also said that the company has a bevy of assets it might want to unload. Tilton also floated the possibility that its airline could be subject to a merger. Bear Stearns (NYSE:BSC) has estimated the value of assets not related to the company's core flight operations at around $16 billion.

Yet employees lost out on retirement benefits when the airline defaulted on its pension obligations, and creditors and shareholders were also denied a full return on their investment from the bankruptcy. Taxpayers are on the hook for more than $6 billion in pension benefits to United's employees. Meanwhile, United now holds a competitive advantage over other airlines, since it no longer has to worry about paying its retirees. And executives who were festooned with large stock option grants when United emerged from bankruptcy might just enjoy a huge boost in their shares' value from any spinoff or merger.

The sum of the parts
What kind of money might United gain for these ancillary assets? According to the widely circulated Bear Stearns report, the Mileage Plus program could be worth as much as $7 billion. It generated some $600 million in revenue in 2006; spinning it off would be a valuable jewel indeed for United.

United Services is United's maintenance, repair, and overhaul business. It generated roughly $280 million in revenue in 2006, a 12% increase over the year before. The MRO work it performs servicing planes from Boeing (NYSE:BA) and Airbus was responsible for about 75% of the division's revenue. If it were valued like independent MRO players AAR (NYSE:AIR) and Triumph Group (NYSE:TGI), United Services might be worth as much as $500 million. Bear Stearns estimated it's worth between $60 million and $600 million to United, though it might readily get $330 million in the marketplace.

A merger bonanza
Perhaps the biggest coup -- for executives, anyway -- would be a merger with another airline. Tilton received more than half a million United shares in stock options and restricted shares when the airline emerged from bankruptcy. This windfall was valued at more than $20 million, vesting over five years; Tilton has already exercised seven figures' worth of his holdings.

Upon a change of control in the airline, however, United's latest proxy statement says that Tilton's stock options would immediately vest, entitling Tilton to $24 million in compensation. If he was forced out of the executive suite within two years of the merger's completion, he'd also receive an additional $12 million. That wouldn't be a bad payoff for a boss who oversaw the decimation of his workers' and retirees' pensions and benefits. At least one person would get a comfortable retirement.

Broken industry
The airline industry is undoubtedly tough -- one reason Warren Buffett has never liked investing in it. And management should be trying to increase shareholder value. Yet the abundance of loftily valued options available to this once-bankrupt company makes me suspect that its previous excuses for scuttling its employees' pension obligations may have been more fantasy than reality.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.